The World Wide Web offers some excellent resources for calculating and presenting the financial and tax implications of charitable giving. These tools serve a valuable function -- they help potential donors devise financial plans aligned with their values and objectives -- while changing the way people think about philanthropy.
For many, planned giving is an important lifestyle choice, serving as a positive catalyst for social change. These websites demonstrate how:
What if Philanthropy Became Donor-Friendly at the Catalogue for Philanthropy (Massachusetts) suggests that changes in the structure of planned giving are inevitable: "No one can say at this point what the new paradigm will be, but it is clear that new information technology will powerfully inform it, and that it will be consciously donor-oriented."
The Gallo Institute, established by Jon and Eileen Gallo, advocates teaching children financial responsibility in a philanthropic context that they call "the philanthropic life." The Gallos are the authors of Silver Spoon Kids: How Successful Families Raise Responsible Children, and The Financially Intelligent Parent: 8 Steps To Raising Successful, Generous, Responsible Children.
Claude Rosenberg's "newtithing" approach is discussed in Craig Marine's article "The Philanthropist Claude Rosenberg epitomizes the new, Western way of giving, and he's trying to convince American millionaires to follow suit". That piece in the San Francisco Chronicle, Dec. 2, 2001 states:
"His groundbreaking premise is that individuals should abandon the old manner of thinking about tithing, which is based on the sole consideration of gross income. Rosenberg's 'newtithing' philosophy takes into account the significant sums earned through investment assets - savings accounts, stocks, money market funds, real estate and other investments that may generate additional income or capital appreciation."
The "newtithing" concept also is explored on the NewTithing Group website. This website includes the PrudentPal Charitable Giving Planner budgeting calculator, which takes into account the prospective donor's income, expenses and assets on an annual basis as discussed under "Evolving Software."
Leimberg Powerpoint Presentations offers "Charitable Planning: Gifts That Give, Gifts That Give Back," which explains and advocates charitable gift and charitable trust planning, in the context of giving as an integral part of the donor's lifestyle. This is a comprehensive PowerPoint slide show, with loose leaf materials. Among other things, the presentation focuses on donor motivation and the benefits to the donor of charitable giving.
There are a number of websites and programs that address an array of traditional charitable planned giving calculators and that require minimal data entry effort. These tools will calculate the basic tax effect of the application of common charitable gift planning techniques. These calculators include:
PhilanthroCalc for the Web publishes online calculators for charitable gift annuities, charitable lead trusts, CRATs and CRUTs. Implementations are available on the Planned Giving Resources website (Donor Direct version) and on the Henry & Associates website (the more full-featured Compliance Now version).
GiftLaw Calculator from Crescendo Interactive calculates the income and estate tax deductions flowing from charitable trusts. Implementations include: The Texas A & M Foundation at (click on GiftLaw Calculator on the left side menu) and the Capital Trust charitable tax deduction calculators using GiftLaw. A free trial version is available from the publisher.
Charitable Financial Planner from Brentmark addresses charitable gift and trust calculations for charitable trusts (including GRITS, GRATS and GRUTS), charitable gift annuities and deferred gift annuities. It calculates the related income tax effects of appreciated property and creates pie and bar charts demonstrating the calculations. A downloadable demo is available.
Assetstream (a subsidiary of Planned Giving Design Center) is a web-based calculator that computes the tax advantages of donating appreciated stock to charity. This calculator is available for installation on your website. The Assetstream website also includes text resources on giving appreciated securities and a downloadable Excel spreadsheet.
Charity Navigator provides a basic income tax giving calculator for donors in various tax brackets. This free tool delivers immediate results and should be useful to donors of various income levels.
Other websites and programs are also available that expand the calculation and presentation of the tax and economic consequences of charitable giving and the effect of gifts on the client's overall financial plan.
Crescendo GiftLegacy is a web-based calculator and slide show for installation on professional websites that creates slide shows for charitable planned giving and sales techniques. The slide shows discuss the related law and the implementation of the device chosen, display graphics and incorporate calculations based on the data you input. The slide shows may include a canned audio description of the process represented by the slides. The Rocky Mountain Conference United Methodist Foundation is an example implementation. Crescendo Current GiftLegacy Web Sites maintains a page listing organizations that run GiftLegacy on their websites. The calculations and slides may be viewed for free from any website implementing GiftLegacy, but there is some inclusion of the organization's name built into the slides.
PhilantroTec offers PhilanthroCalc for Windows v. 6.0. It is a feature-rich, Excel-based, program that interfaces with a variety of computer applications. In addition to the traditional computation of the payout and charitable deduction from CRATs, CRUTs, CLATs, CLUTs and charitable gift annuities, the program allows the user to create a plan to fit the charitable trust into the donor's total financial picture using techniques such as a side fund outside the trust for accumulation of trust disbursements to the donor; balance between expenditure and reinvestment; life insurance to protect the heirs; annual cash flow projections and techniques for accumulation of any excess income to the donor's heirs. This program, through its export to Excel feature, allows the user to copy, paste or link any report, portion of a report or graph directly into any Windows-compatible software program and enables the user to extend the reports, to add comments or change graph colors or types. It creates reports that are automatically customized for print out or on-screen presentation. Sample reports and a 30-day demo are available.
The NewTithing website expresses the ideas of Claude Rosenberg, as exemplified in the PrudentPal Charitable Giving Planner, (click on PrudentPal) which calculates the net after income tax deduction effect of charitable giving, and suggests an optimal giving level. When selecting a giving strategy, you may choose a quick approximation or select from more detailed donation-driven, tax-leveraged, asset-preservation, or asset-driven approaches. The program then calculates the donor's after-tax actual cost of a given donation and year-end assets after donations. At your request, the program will calculate how much more than a given amount a donor may pay without actually paying more than the donor's targeted gift, such as the actual after-tax out-of-pocket cost for a given benefit to charity. The program allows calculation of likely investment income, based on the percentage of the donor's portfolio in diverse investments, and factors in other earnings, net realized gains and the capital gain tax. PrudentPal also includes text-based advice on comfortable giving amounts for asset based and income based strategies. It includes calculation of cash savings for donating appreciated property. This program requires that you disable all pop-up blockers in your browser, add-in toolbars (such as Google and Yahoo) and anti-virus software that you may be using, so as to allow popups (detailed instructions are on the PrudentPal webpage for various browsers, toolbars and firewalls). Although the program has a bit of a learning curve, it provides interesting and novel calculations and viewpoints related to the total giving context of the donor.
The online resources for planned giving encourage new concepts and beneficial practices. Among those who reap the rewards are charitable organizations, practitioners, individual beneficiaries and, of course, the donors themselves.
Trusts & Estates magazine is pleased to present the monthly Technology Review by Donald H. Kelley -- a respected connoisseur of the software and Internet resources wealth management advisors use to further their practices.
Kelley is a lawyer living in Highlands Ranch, Colo. and is of counsel to the law firm of Kelley, Scritsmier & Byrne, P.C. of North Platte, Neb. He is the co-author of the Intuitive Estate Planner Software, (Thomson-West 2004). He has served on the governing boards of the American Bar Association Real Property Probate and Trust Section and the American College of Tax Counsel. He is a past regent and past chair of the Committee on Technology in the Practice of the American College of Trust and Estate Counsel.
Trusts & Estates has asked Kelley to provide his unvarnished opinions on the tech resources available in the practice today. His columns are edited for readability only. Send feedback and suggestions for articles directly to him at [email protected].
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